News Analysis: Does the care cost cap fit?

4 Mar 13
The government’s proposals on long-term care have been broadly welcomed but there are concerns that they do nothing to address chronic under-funding in the sector.

By Vivienne Russell | 5 March 2013

The government’s proposals on long-term care have been broadly welcomed but there are concerns that they do nothing to address chronic under-funding in the sector.

Care home

When the economist Andrew Dilnot published the conclusions of his inquiry into the funding of long-term care in July 2011, he did so with optimism and expectation.

At the launch of his report, Dilnot said he was ‘confident’ that the government would respond positively to his commission’s ideas, chiefly a £35,000 cap on an individual’s care costs. Changes should be implemented ‘with pace’, Dilnot urged, adding: ‘I expect to be happier and happier as we move forward.’

Eighteen months and a change of health secretary later, the government finally responded. Health Secretary Jeremy Hunt’s announcement stuck broadly to Dilnot’s original proposals, with implementation slated for 2017, well into the next Parliament.

The most striking difference was a higher cost cap, to be set at £75,000 in 2017/18 prices. This cap applies only to care costs. Individuals in residential care will still have to spend about £12,000 a year of their own money on food and accommodation. People who develop care needs before they reach retirement age will benefit from a lower cap and those who have care needs before the age of 18 will have the cap set at zero.

Other changes include raising the means-testing threshold along the lines Dilnot recommended. It will go up from its current level of just over £23,000 in assets to £123,000 in 2017/18 prices. And by April 2015, legislation will be brought in to ensure that no one will have to sell their home to fund residential care: they will instead be able to defer payment until after death. Also, a new set of nationally defined eligibility criteria will underpin the changes and make access to care more consistent across the country.

Hunt called the changes ‘historic’ and said they came at a ‘watershed’ moment. ‘For too long, care has been ducked by successive governments, leading to an unfair system that has seen people selling their homes and losing nearly everything they’ve worked for to pay for their care. With us, that unfairness is ending.’

Among social care experts and analysts there is broad agreement that this ministerial grandstanding is for once deserved. Under the coalition, there has been relatively quick progress in an area the previous Labour government struggled to get to grips with.

‘Any movement on social care funding in this dreadful fiscal climate has got to be welcomed,’ says Richard Humphries, assistant director at the King’s Fund.

‘Many people thought this was going to stay in the long grass, they thought it was dead… there were cynics saying [the Dilnot report] had arrived into the world stillborn. Well, this has proved them wrong. It is a step in the right direction, and what’s significant about it is that it’s the first time in the history of the welfare state that it’s been accepted there should be a limit on how much people should pay towards their care.’

At the Local Government Association, community wellbeing board chair David Rogers tells Public Finance that the association is ‘particularly pleased’ that the government has listened to councils’ concerns and agreed to take forward Dilnot’s recommendations. He’s not too concerned that the £75,000 cap is somewhat higher than the £35,000 Dilnot singled out as the optimum figure. The Dilnot report suggested that a cap of up to £50,000 would be fair, which in 2017 prices is £61,000, not too far away from the £75,000 chosen by the government, he notes.

Humphries agrees with the LGA’s optimistic assessment. Even if the cap, at £75,000, is higher than some would have hoped for, it is at least a start. ‘If people feel the cap is too high and won’t benefit enough people, there is the option for future chancellors to make it lower,’ he adds.

But James Lloyd, director at the Strategic Society Centre think-tank, notes that the government’s response to Dilnot offers up as many questions as answers.

Lloyd acknowledges that any reform of social care funding is a ‘significant step forward’ and a ‘real achievement’ but qualifies his support.

‘What the commission recommended had limitations and those limitations still apply,’ he tells PF. ‘As we now contemplate implementing them in four years, the government and stakeholders will really need to get to work on the details and ironing out those creases.’

Chief among his concerns is whether the cap is really a cap and whether anyone will actually hit it. He also questions whether the £12,000 people will be asked to contribute to their accommodation costs is the right amount, especially as it’s above the government’s minimum income guarantee for pensioners. Those who cannot pay for accommodation costs from income alone could be required to spend down their assets further, he says.

Wider policy changes could also have an impact, Lloyd argues. The relationship between the NHS and social care is in flux and changes look likely to be accelerated. ‘As we go towards 2017 and implementation [of the care funding changes], we need to make sure the model is fit for the new world that it will be operating in… Some of it might need to be rethought in that context.’

There is widespread agreement among commentators that the timing of implementation does nothing to help councils with the very significant social care challenges they face in the short term. According to the Association of Directors of Adult Social Services, almost £1.9bn has been taken out of social care budgets in England in the past two years, and there will be more pressures in the years ahead.

Immediate prospects for social care are ‘pretty dismal’, says Humphries. The response to Dilnot was ‘just one part of the equation’, determining how costs can be shared between government and individuals. ‘What it will not do is deal with underlying underfunding of the system,’ he adds.

‘Councils are struggling to take money out of their budgets without reducing the quality or amount of care available… There remains a much bigger question of how and from where do we find the money to pay for the amount and quality of care we’re going to need,’ says Humphries.

Rogers says the LGA will continue to make the case to government that its austerity programme is making the social care funding issue even more stark, but he’s keen to separate the issue from the government’s response to Dilnot. The growing gap between demand for social care services and the resources available is not a new issue, he says. ‘We’ve been lobbying on this from before the current government took office, from before Andrew Dilnot started his work… The situation is going to become more pressured over the next few years.’

The health secretary’s response was a long time coming and marks a new phase in the long-running social care debate. As Lloyd says: ‘There is still work to do. In a way, this is just the beginning of the story and not the end.’


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